01:31:43 · Josh Zoffer
[01:31:43] S7: Point two is, I think, you know, there's a real risk that if we, you know, stop or pause the construction of data centers or make it really hard to do that in The United States, we could find ourselves in a very similar position. Right? That data centers are not just, you know, piles of chips, but there are also important other technologies, power electronics like transformers and switch gear, the kind of stuff that our portfolio company, Giga Energy, makes, as well as, you know, more more basic industrial inputs like steel. And that stuff has to be made somewhere. And today, because of the shortages for a lot of those goods, as well as the fact that, you know, data centers are at the very cutting edge and they're they're financed by some of the deepest pocketed developers on the planet, there's a willingness both to pay for faster, and more advanced technology. And so companies that, you know, like Giga are both able to do some of this stuff in America in a way that wasn't possible or wouldn't be possible without this kind of generational demand pull. And there's also demand for new technologies, things like, you know, optical links or solid state transformers that now there's sort of a transfer The US to get ahead and, again, because there's a source of demand to pay for it all. And then point three is, again, because these are sort of some of the deepest pocketed corporations out there financing all of this, that to the extent there are trade offs in the form of things like higher energy costs that in some cases do arise when data centers are built, that can be solved by having hyperscalers pay for some of that. And so I think there's a better outcome here, one that better advantages or supports America's long term economic competitiveness than just saying, we don't wanna do this here. Let it be done offshore.
01:33:19 · John Coogan
[01:33:19] S0: Do you have an idea of thesis particularly around why America is currently so strong in data center construction? It feels like when I when I count up the the gigawatts, America is doing fantastically. We we are in the lead. Of course, I agree with you on everything. We gotta hold the lead, but I wanna retreat to the source of strength that got us here in the first place because when you tell the story of there's gonna be a new industry, it's gonna be industrial, and it's gonna really start in 2000 and run until 2026. If you had said shoes, I would have said that's gonna happen in China. You know, if you had said any other any other piece of the economy, I would have said that absolutely would have been pushed offshore, pushed out of The United States, and yet we got here to this place where we do have, you know, Virginia and and and, you know, AWS and GCP and Azure and so many massive campuses. And the question is really just, are we going to go bigger? But why didn't we build the data centers abroad in the last two decades before there was all this discussion about near peer competition, geopolitics? It feels like that would have been the natural choice, and yet we did choose to build here throughout the last two decades.
01:34:40 · Josh Zoffer, Deena Shakir
[01:34:40] S7: Yeah. I think it's a great question. I I think it really comes down to two things. One is that, even today still, latency really matters. Right? If you are trying to serve customers that care about getting their data or their inference Mhmm. As quickly as possible Mhmm. You need data centers to be sort of, you know, close to to the customers they're being served. [01:34:59] S9: Yeah. [01:34:59] S7: I think there's a real chance for what it's worth that that matters less and less over time as, you know, as as inference, workloads become more agentic. Right? Like, agents don't care if they have to wait five seconds. If you're away from your computer for two hours running long a long query and, you know, it takes a little longer because the data center is somewhere else, you're not gonna notice that. And so I think to me, what that means is these supply chains are gonna be formed today. Right? The data centers are being built today. The the the factories that supply them are being set up today when speed and reliability and industrial capacity matter. And so I think there's also a real risk that if we wait and those supply chains are built somewhere else, it's gonna be really hard to reverse this. And the point I'm trying to make with the rare earths comparison is, like, we know how devastating that can be. Let's think really hard before we make that mistake again.
01:35:46 · John Coogan, John McElhone
[01:35:46] S0: When you think about the rare earth, situation, it feels like a lot of that stems specifically from China's leverage over The United States. I I think it would be a very different discussion if it was Canada or, you know, Germany. And when I think about the AI supply chain, I go to Zeiss and Trump and ASML and TSMC and SK Hynix, and I'm in Western countries. Do you think that there is a that there is a discussion to be had about the the the the sphere of influence beyond America but in the West where we can partner on data center construction reliably? Or is this, is it is it actually critical to have, the vast majority of data centers built out within the the 50 states? [01:36:37] S5: I don't think they
01:36:38 · Josh Zoffer
[01:36:38] S7: have to be, in the 50 states, for sure. I think there's definitely room to collaborate with allies both in where the physical data centers are located as well as, in the supply chain. So we're not gonna make every single thing that goes in every single data center, in The United States. But but I would say maybe two things that concern me. One is, you know, it came out a couple of weeks ago that the Chinese government is reportedly planning a $295,000,000,000 fund for data center construction. So the Chinese government, unsurprisingly, because they run this play before, they get it. Right? They understand how important all of these technologies and supply chains are. The second is today. There are lots of important pieces of the data center supply chain from the GPU manufacturing at places like TSMC to the ASML EUV lithography machines that really can only be made in, you know, Western allies, like Taiwan and The Netherlands. I think if the history of industrial development tells us anything, it's that we can't rely on that being true forever. And so, you know, taking action today to make sure that, you know, while there's a chance to take advantage of this capacity, and this demand to build next generation technology, industrial capacity in The United States when these technologies aren't commoditized and can't be bought more cheaply from a place like China is kind of you know, it's it's an important window of opportunity. And if we miss that opportunity, again, I think there there's a a world where we really regret it. You know, that doesn't mean just we should build all the data centers. We should have no no restrictions, no regulations. I think that would be a big mistake, and I think that is a way to politically get wrong you know, wrong footed and and generate a lot of opposition, which is why it's important that, you know, some of these energy costs be moved onto onto developers, as well as, you know, things like environmental restrictions being put in place to make sure that we do this the right way. I think it's important that, you know, that to me, the lesson of the rare earth example is you've gotta balance these things. Right? It can't be all of one or all of the other.
01:38:30 · John Coogan, Josh Zoffer, Jordi Hays
[01:38:30] S0: Last question. You, you wrote this in the Financial Times. It clearly will land with a geopolitically minded audience. But while I agree with a lot of what you said, I can't imagine it translating very well to everyday American voters who see AI as very deeply unpopular. How are you thinking about the the jumps and the translation layer that needs to happen to actually get, you know, American voters on board with this plan? [01:39:02] S7: Yeah. I mean, look. To me, first of all, completely agree. I think there there is a real opposition to data centers in in part because, you know, yes, they're they're big and they can be kinda ugly. But the reality is I my view is a lot of that has to do with the fact that they are the physical representation of Yes. Of AI. Right? Yeah. Yeah. [01:39:19] S0: If you look at the Instagram comments, like, you can very clearly tell that the vast majority of people that are, like, commenting on, like, data center bad content have never seen a data center. Like, they're nowhere near one. They might live in a major city that they don't even see them. But [01:39:34] S1: Yeah. You could see data centers putting up signs that say no AI served here. [01:39:37] S0: Yeah. But they don't like the idea of they're losing a job or losing out financially or watching companies get even bigger than they already are, all of that. So, yes, it's a referendum. But then how do you bridge that gap?